Amicus Curiae Brief — Adarand Constructors, Inc. v. Mineta

Supreme Court, U.S.

Thay | 2001) | “FTE

4

JUN 1

No. 00-730 -

In the Supreme Court of the Uiited States,

ADARAND CONSTRUCTORS, INC.

Petitioner,

v.

NORMAN Y. MINETA,

SECRETARY OF TRANSPORTATION, ET AL.

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Tenth Circuit

BRIEF AMICUS CURIAE OF

SOCIAL SCIENCE AND COMPARATIVE LAW

SCHOLARS IN SUPPORT OF NEITHER PARTY

Clark D. Cunningham

Washington University

School of Law

Campus Box 1120

One Brookings Drive

St. Louis, MO 63130-4899

(314) 935-6413

Counsel of Record for Amicus Curiae

June 1, 2001

TABLE OF CONTENTS

Page

DOTERNT CP MTD o.oo ince vciccvdercecdasesan™

SUMMARY OF ARGUMENT ...........-..-...000. 1

Social Science Insights about the Lingering Effects of

The Use of Racial Presumptions in

the DBE Program 12

1. Racial Presumptions in the SBA Business

Development (BD) Program 13

2. Racial Presumptions in the SBA Small

Disadvantaged Business (SDB) Program 15

3. Racial Presumptions in the DOT Disadvantaged

Business Enterprises (DBE) Program 17

The Need for Social Science Methods to Achieve

Narrow Tailoring 18

The Use of Social Science Methods in India to Tailor

Group Preferences to Lingering Effects 25

GUAM cccceccaccccvecsaboccebaseuepesgee ae

ii

TABLE OF AUTHORITIES

Page

CASES:

United States

Adarand Constructors v Pena, 515 U.S. 200

DT Sesebuctekedessecotcecosoces 2, 13, 19, 28

Adarand Constructors v Slater, 120 S.Ct. 722 (2000) 17, 18

Adarand Constructors v Slater, 228 F.3d 1147

os | BEEP TTTT TTT TTT Te 15, 16, 17, 18

City of Richmond v J. A. Croson Co., 488 U.S. 469

EEE DRGRESUSRESCOSESSEsecRecococcccce 19, 28

University of California Regents v Bakke, 438 U.S. 265

DEE SEREGAESORESSOOSEDOCCD eC Ccoooeces 24, 28

India

Ashoka Kumar Thakur v State of Bihar, 1996 All India

DEE TE ee cedeedeccccccencsoceveces 27

Indra Sawhney v Union of India (1), 1993 All India

RN SE 26, 27

Indra Sawhney v. Union of India (II), 2000 All India

NE i564 ose 46s b65r se eet 27, 28

STATUTES:

Be as ET SPIO) occcccccccccceccccccccece 14

15 U.S.C. § 637 (d) (2001) 2... ccrcccccccceceees 15,17

TABLE OF AUTHORITIES-Continued

Page

Transportation Equity Act for the 21st Century, Pub. L. -

105-178, Sec. 1101(b), 112 Stat. 113-115 (1998).... 13,17

REGULATIONS:

13 C.F.R. § 124.103 (2001) ........... 0 ee eeee 14, 15, 16

13 CPLR. § 124.104 (2001) .......cccecccccccccees 14

13 C.F.R. § 124.1002 (2001) .... cece eeeeccceeeeeees 16

13 C.F.R. § 124.1008 (2001) 2... cee cee ee ee eeeeeeees 16

49 C.F.R. § 19.001 (2001) 2... cece eee ee ee eceeeneeees 8

49 C.F.R. § 19.703 (2001) ... cece eee eeeecceeceeeeees 8

49 C.F.R. § 26.45 (2001)... cece e eee eeeeeeeeeees 12, 22

49 C.F.R. § 26.5 (2001) ....cecccecceeeeeeeccencees 18

LEGISLATIVE HISTORY:

144 Cong. Rec. $1422. (1998) 2... ee eeeceeeeeeees 11

144 Cong. Rec. S 1404 (1998) 2.0... ccc ee cece eenees 1]

144 Cong. Rec. $1409-10 (1998) 20... cece eee ee eens 1]

SECONDARY SOURCES:

lan Ayres, Fair Driving: Gender and Race Discrimination in

Retail Car Negotiations, 104 Harv. L. Rev. 817 (1991)8

iv

TABLE OF AUTHORITIES-Continued

: Page

lan Ayres & Frederick E. Vars, When Does Private

Discrimination Justify Public Affirmative Action?,

98 Columbia L. Rev. 1577 (1998) ..........e08- 12

Gary S. Becker & Kevin M. Murphy, Social Economics

(BESS) ccccccccccccccccccececcccccscsecesees 3

George Borgas, Ethnic Capital and Intergenerational Mobility,

107 Quarterly Journal of Economics 123 (1992) .... 3

James S. Coleman, Foundations of Social Theory (1990) .. 3

Clark D. Cunningham, Affirmative Action: India’s Example,

4 Civil Rights Journal 22 (1999) .........eeeeeee 26

Clark D. Cunningham & N.R. Madhava Menon, Race, Class,

Caste ...? Rethinking Affirmative Action, 97 Michigan

Law Review 1296 (1999) .....ccsccccccceccens 26

Clark D. Cunningham & N. R. Madhava Menon, Seeking

Equality in Multicultural Societies (n.d. on Equality

Wee TEED occccccccccccccccccccececcoccceose 26

David M. Cutler & Edward L. Glaeser, Are Ghettoes Good or

Bad?, 112 Quarterly Journal of Economics 827 (1997) 3

John Donohue & James Heckman, Continuous versus Episodic

Change: The Impact of Civil Rights Policy on the

Economic Status of Blacks, 29 Journal of Economic

RED FP CHESED cccccesecoesesencesecces 4

Marc Galanter, Competing Equalities: Law and the Backward

Classes in India (1984) .....cccccececcececeees 26

Vv

TABLE OF AUTHORITIES-Continued

Page

M. Inzlicht & T. Be-Zeev, A threatening intellectual

environment. Why females are susceptible to

experiencing problems solving deficits in the presence of

males, Psychological Science, 11, 5, 365.371 (2000) . 7

George R. LaNoue & John C. Sullivan, Group Presumptions:

Determining Group Eligibility for Federal Procurement

Preferences, 41 Santa Clara L. Rev. 103 (2000) . 22, 23

George R. LaNoue & John C. Sullivan, Presumptions for

Preferences: The Small Business Administration's

Decisions on Groups Entitled to Affirmative Action,

6 Journal of Policy History 439 (1994)..... 19, 20, 21

Glenn C. Loury, The Anatomy of Racial Inequality

(forthcoming 2002) ........eeeeeeeeeecees passim

Glenn C. Loury, A Dynamic Theory of Racial Income

Differences, in Women, Minorities and Employment

Discrimination 153 (P. A. Wallace ed.1977) ....... 3

Glenn C. Loury, Economic Discrimination: Getting to the

Core of the Problem, in One by One from the Inside Out:

Essays and Reviews on Race and Responsibility

in America 93 (1995) ...ccccccccccccccccsecces 3

Glenn C. Loury, Jntergenerational Transfers and the

Distribution of Income, 49 Econometrica 843 (1981) 3

Alice O'Connor, Chris Tilly & Lawrence Bobo, eds., Urban

Inequality: Evidence from Four Cities (2000) ..... 21

vi

TABLE OF AUTHORITIES-Continued

Melvin Oliver & Thomas Shapiro, Black Wealth, White

WORE CIDE) cocccccccccccccecccoceccesoooes +

Sunita Parikh, The Politics of Preference: Democratic

Institutions and Affirmative Action in the United States

GE TUB CIF) ccccccccccccccccccsecccccces 26

Alejandro Portes, Social Capital: Its Origins and Applications

in Modern Sociology, 22 Annual Review of Sociology |

(FETED coccccccvcceccocccccessocscsoscooeees 3

John David Skrentny, Affirmative Action and New

Demographic Realities, The Chronicle of Higher

Education B7 (February16, 2001)......... 21, 23, 24

John David Skrentny, The Jronies of Affirmative Action:

Politics, Culture & Justice in America (1996) ...... ]

John David Skrentny, The Minority Rights Revolution 29

(pre-publication draft 2001) ........ceeeeeeeees 20

Claude M. Steele, Thin Ice: Stereotype Threat and Black

College Students, 284 Atlantic Monthly 44

CER, TEUSD ccccccccccccscscocsesoccascoscese 7

Claude M. Steele, A Threat in the Air: How Stereotypes Shape

Intellectual Identity and Performance, 52 American

Psychologist 613 (1997) .....ccccececcccccececes 7

ne ER RR ee

vii

TABLE OF AUTHORITIES-Continued

Page

Claude M. Steele & Joshua Aronson, Stereotype Threat

and the Intellectual Test Performance of African

Americans, 69 Journal of Personality and

Social Psychology 797 (1995) ....seeeeeeeeeeees 7

Claude M. Steele & Joshua Aronson, Stereotype Vulnerability

and African-American Intellectual Performance, in

Readings about the Social Animal 409 (Joshua Aronson

of, Tr eb., 1995) ccccccccccccccccccccccceces 7

Thomas J. Sugrue, Breaking Through: The Troubled Origins

of Affirmative Action in the Workplace in Color Lines:

Affirmative Action, Immigration, and Civil Rights

Options 31 (John David Skrentny, ed. 2001) ....... 4

U.S. Department of Justice, The Compelling Interest for

Affirmative Action in Federal Procurement,

61 Fed.Reg. 26042 (May 23, 1996) 5

U.S. Department of Transportation, Disadvantaged Business

Enterprises in Department of Transportation Programs:

Final Rule, 64 Fed. Reg. 5096 (Feb. 2, 1999)

(Supplementary Information: Background) ....... 10

l

INTEREST OF AMICUS CURIAE

This brief is filed on behalf of five university professors

who have written on the subjects of racial inequality and

affirmative action from social science and comparative law

perspectives.’ It is not filed on behalf of either petitioner or

respondent and does not take a position as to whether the

decision of the Court of Appeals in this case should be affirmed

or reversed.’

SUMMARY OF ARGUMENT

When this Court held in 1995 that strict scrutiny should be

applied to this case, Justice O’Connor provided the following

much-quoted and discussed explanation: “The unhappy

persistence of both the practice and the lingering effects of

The members of the amicus group are Joshua Aronson, Assistant

Professor, Department of Applied Psychology, New York University; Clark

D. Cunningham, Professor of Law, Washington University in St. Louis; Marc

Galanter, John & Rylla Bosshard Professor of Law and S. Asian Studies,

University of Wisconsin-Madison and LSE Centennial Professor, London

School of Economics; Glenn C. Loury, University Professor, Professor of

Economics, and Director of the Institute on Race and Social Division, Boston

University; and John David Skrentny, Associate Professor of Sociology,

University of California-San Diego. This brief has been authored entirely by

Clark D. Cunningham, counsel of record for amicus curiae, in consultation

with the members of the amicus group. No one other than the members of the

amicus group has made a monetary contribution to the preparation or

submission of this brief. More information about the members of the amicus

group and their scholarship is available on the Rethinking Equality in the

Global Society Web Site: http://law.wustl.edu/Equality (“Equality Web

Site”).

? ‘The preface to John David Skrentny’s book The /ronies of

Affirmative Action describes the same purpose which motivates these scholars

to submit this brief: “Readers may justifiably expect this book to have a

political agenda, either for or against affirmative action, since almost

everything written about that controversial policy has such an agenda. This

book, however, has no political agenda, unless one considers the desire to

question fundamental assumptions on both sides and move tired debates

forward ... If social scientists can find ideas that will help ... interested

individuals on both sides of the issue ... better understand or rethink their

positions on affirmative action, the book will have succeeded.” The /ronies

of Affirmative Action: Politics, Culture & Justice in America ix (1996).

2

racial discrimination against minority groups in this country is

an unfortunate reality, and government is not disqualified from

acting in response to it.” Adarand Constructors v Pena, 515

U.S. 200, 237 (1995). Looking at the Department of

Transportation (DOT) program for Disadvantaged Business

Enterprises (DBEs) from a comparative law perspective and

with insights from the social sciences suggests that it may be

helpful to separate the problems of “present practice” and

“lingering effects.” This brief will mot address the question of

whether the record in this case shows that the DBE program is

justified by a compelling interest to correct present practices

of discrimination. Rather, this brief seeks to clarify how

lingering effects can be a compelling interest even if it is

assumed that there are no relevant present practices of

discrimination. Racialized categories based on assumptions

about conscious discrimination may be less relevant where the

compelling interest is lingering effects, thus creating a need for

an empirical basis to determine which groups are presently

disadvantaged by the lingering effects of past discrimination

and to support a system for periodic review of that

determination. An affirmative action program thus designed

with the benefit of social science methods should pass strict

scrutiny.

ARGUMENT

A. Social Science Insights about the Lingering Effects of

Discrimination

In his recent W.E.B. Du Bois lectures at Harvard University”

economist Glenn C. Loury reached the following conclusion:

“As an empirical judgment, I hold that reward bias -- unequal

> To be published as The Anatomy of Racial Inequality by Harvard

University Press (forthcoming February 2002). Galley proofs of the book will

be filed with the parties and the Court as soon as they are available indicating

page references to quotations in this brief. The text of the DuBois lectures is

currently available on the website of the Boston University Institute on Race

and Social Division at http://www.bu.edu/IRSD/articles.htm

3

returns to equally productive contributors based on race, is now

less important in accounting for the disparate social outcomes

that history has bequeathed us than is developmental bias --

unequal chances to realize one’s productive potential based on

race.” Loury’s reference to “development bias” is based on his

distinction, now widely accepted among economists and

sociologists,‘ between “human capital” and “social capital.”

Human capital refers to an individual’s own characteristics that

are valued by the labor market; social capital refers to value an

individual receives from membership in a community, such as

access to information networks, mentoring and reciprocal

favors. “Whom you know affects what you come to know and

what you can do with what you know.”* Thus potential human

capital can be augmented or stunted depending on available

social capital. Economic models developed by Loury and

others demonstrate how labor market discrimination, even

several generations in the past, when combined with ongoing

segregated social structure can perpetuate indefinitely huge

differences in social capital between ethnic communities.®

These models have been corroborated by historians like

Thomas Sugrue, whose research produced the following

conclusions:

* See, e.g., Glenn C. Loury, A Dynamic Theory of Racial Income

Differences, in Women, Minorities and Employment Discrimination 153 (P.A.

Wallace ed.1977); James S. Coleman, Foundations of Social Theory (1990);

Alejandro Portes, Social Capital: Jts Origins and Applications in Modern

Sociology, 22 Annual Review of Sociology | (1998); Gary S. Becker &

Kevin M. Murphy, Social Economics (2000).

* Glenn C. Loury, Economic Discrimination: Getting to the Core of

the Problem, in One by One from the Inside Out: Essays and Reviews on

Race and Responsibility in America 93, 103 (1995).

See, e.g., Loury, supra note 4; Glenn C. Loury, /ntergenerational

Transfers and the Distribution of Income, 49 Econometrica 843 (1981);

George Borgas, Ethnic Capital and Intergenerational Mobility, 107 Quarterly

Journal of Economics 123 (1992); David M. Cutler & Edward L. Glaeser,

Are Ghettoes Good or Bad?, 112 Quarterly Journal of Economics 827

(1997).

‘

4

"[H]iring practices drew from and reinforced communal,

religious and ethnic networks. ... In northern cities,

building trades became a niche of whiteness, drawing

their membership from ethnically diverse European

American communities. Kinship still mattered, but union

references also came from neighborhood friendship

networks, schoolmates, and connections formed in

churches and parochial schools. All of these networks

shared one element: they did not include African

Americans."’

In considering the ways in which racial discrimination can

have “lingering effects,” it may be helpful to consider another

distinction offered by Loury, between “discrimination in

contract” and “discrimination in contact”:

“ The phrase “discrimination in contract” is meant to

invoke the unequal treatment of otherwise like persons

based on race in the execution of formal transactions — the

buying and selling of goods and services, for instance, or

the interactions with organized bureaucracies, public and

private. Discrimination in contract, in other words, is a

standard means by which reward bias against blacks has

been perpetrated. By contrast, “discrimination in contact”

refers to the unequal treatment of persons on the basis of

race in the associations and relationships formed between

individuals in social life, including the choice of social

intimates, neighbors, friends, heroes and villains. It

involves discrimination in the informal, private spheres of

life. ... Given that individuals socialized in the United

, Breaking Through: The Troubled Origins of Affirmative Action in

the Workplace in Color Lines: Affirmative Action, Immigration, and Civil

Rights Options 31, 41-42 (John David Skrentny, ed. 2001). See also Melvin

Oliver & Thomas Shapiro, Black Wealth, White Wealth (1995) (relating vast

black/white wealth gap to lingering effects of discrimination, particularly in

housing markets); John Donohue & James Heckman, Continuous versus

Episodic Change: The Impact of Civil Rights Policy on the Economic Status

of Blacks, 29 Journal of Economic Literature 1603 (1991).

5

States understand themselves partly in racial terms, and

that they must in any liberal political order be endowed

with autonomy regarding the choice of their most intimate

associations, it is inevitable that the selective patterns of

social intercourse that lead to discrimination in contact

will arise.”

This distinction is illustrated, in the context of this case, by the

following statement quoted in the 1996 statement published by

the U.S. Department of Justice, The Compelling Interest for

Affirmative Action in Federal Procurement: “low bidding

Hispanic contractor told that he was not given subcontract

because the prime contractor ‘did not know him’ and that the

prime ‘had problems with minority subs in the past’.” 61

Fed.Reg. 26042, 26059 n 100 (1996), (quoting BBC Research

and Consulting, Regional Disparity Study: City of Las Vegas

IX-12 (1992)). The latter reason is obviously “discrimination in

contract.” But what if the first reason (I don’t know you) was

the only reason for rejecting the lowest bid? The prime

contractor is not legally obligated to accept the lowest bid and

indeed may be acting prudently in contracting with a higher ~

bidder who is known to him. Personal familiarity is probably

the best source of information about reliability and capacity to

perform the work well and on time.

In Loury’s earlier economic analyses, legally-permissible

social segregation was relevant to “lingering effects” primarily

because it perpetuated the inequitable distribution of social

capital caused by racial discrimination imposed on prior

generations. The unsuccessful bidder in the example above

may not have personally known any other prime contractor nor

have known other people who knew them. The bidder’s own

social network would thus have provided no useful social

capital. Not only would there be no prime contractors within

that person’s circle of friends and relatives but the usual

methods of forming new trusting affinities outside that circle --

such as in-law relationships, church membership, neighbors,

parents of your children’s friends -- would be blocked by legal

6

patterns of social segregation. Creating an incentive for the

prime contractor to do business with this bidder not only

acknowledges the present harm caused by past discrimination

but also helps to eliminate its lingering effects by infusing

social capital into the bidder’s community. If the bidder does

a good job on time, not only does the bidder become someone

“known” to the prime contractor, but he also becomes

“someone who knows someone” within his community.

In his recent DuBois lectures, however, Loury also links

“discrimination in contact” with a form of “lingering effect”

that is distinct from, although related to, unequal social capital.

With specific reference to the current situation of African-

Americans, he proposes that continuing patterns of social

segregation be understood not “as some form of anti-black

enmity” but rather in terms of “subtle dynamics ... of racially

based social cognition” that he terms “stigma”:

“My use of the term ‘racial stigma’ alludes to [the]

lingering residue in post-slavery American political

culture of the dishonor engendered by racial slavery. It is

crucial to understand that this is not mainly an issue of the

personal attitudes of individual Americans. To reject my

argument here with the claim that, ‘stigma cannot be so

important because attitude surveys show a continued

decline in expressed racism among Americans over the

decades,’ is to thoroughly misunderstand me. I am

discussing social meanings, not attitudes

Discrimination is how about how people are treated;

stigma is about who they are understood to be.”

Research by Claude Steele, Joshua Aronson and a number of

other psychologists provides evidence that racial stigma is

indeed a very real lingering effect that continues to harm in

ways that cannot be attributed to the present practice of

intentional discrimination. Steele initially hypothesized that if

a person fears that low performance in a particular testing

situation will confirm a stigmatic stereotype, this felt “threat,”

which may have its influence below the level of conscious

Pe

TIEN ne =>

|

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7

awareness, is likely to depress the test performance.® Steele and

Aronson have since accumulated an extensive set of

experimental results that support this hypothesis, showing

dramatically depressed scores for stigmatized group members

that cannot be attributed to bias on the part of test designer nor

to inferior skills of the test taker.’

Although Steele and Aronson’s research is most directly

relevant to affirmative action in higher education, Loury has

suggested ways in which stereotypes and stigma rooted in past

discrimination can~have lingering effects on the market

economy in a similar ironic way by modifying black behavior

so as to confirm the stereotype. Ian Ayres, who is both an

economist and a legal scholar, has reported the results of

empirical research on retail car negotiations showing that black

* Claude M. Steele, A Threat in the Air: How Stereotypes Shape

Intellectual Identity and Performance, 52 American Psychologist 613

(1997). See also Claude M. Steele, Thin Ice: Stereotype Threat and Black

College Students, 284 Atlantic Monthly 44 (Aug. 1999) (available on the

Web at http://www.theatlantic.com/issues/99aug/9908stereotype.htm)

® In one experiment white and black students at Stanford University

were given 27 especially difficult questions from the verbal sections of past

Graduate Record Exams. In the “diagnostic” test group, students were told

that their abilities were being measured while in the “non-diagnostic” group,

they were told the purpose of the experiment was “to examine the psychology

of problem solving.” The performance of black and white students in the non-

diagnostic group, adjusted for each individual’s pre-existing SAT verbal

score, was identical (12 correct answers). However, in the diagnostic group

the black students performed worse (8 correct answers) while the white

students performed at the same level (12 correct answers). Claude M. Steele

& Joshua Aronson, Stereotype Vulnerability and African-American

Intellectual Performance, Readings about the Social Animal 409, 412

(Joshua Aronson ed., 7th ed., 1995). See also Claude M. Steele & Joshua

Aronson, Stereotype Threat and the Intellectual Test Performance of African

Americans, 69 Journal of Personality and Social Psychology, 797 (1995).

Other researchers have replicated their results and the stereotype threat theory

is now widely accepted within the field of psychology. See, e.g., M. Inzlicht

& T. Be-Zeev, A threatening intellectual environment. Why females are

susceptible to experiencing problems solving deficits in the presence of

males, Psychological Science, 11, 5, 365.371 (2000).

8

male testers received final offer mark-ups that were twice as

high as those given white male testers. Fair Driving: Gender

and Race Discrimination in Retail Car Negotiations, 104 Harv.

L. Rev. 817 (1991). Although the behavior of the car retailers

may indeed have been motivated by conscious racial bigotry,

Loury proposes the following model that could also explain

these results:

“Suppose automobile dealers think black buyers have

higher reservation prices than whites — prices above

which they will simply walk away rather than haggle

further. On this belief, dealers will be tougher when

bargaining with blacks, more reluctant to offer low prices,

more eager to foist on them expensive accessories, etc.

Now, given that such race-based dealer behavior is

common, blacks would come to expect tough dealer

bargaining as the norm when one shops for cars. As such,

a black buyer who contemplates walking away would

have to anticipate less favorable alternative opportunities

and higher search costs than would a white buyer who

entertains that option. And so, the typical black buyer

- might find it rational to accept a price rather than continue

searching elsewhere, even though the typical white might

reject that same price. Yet, this racial difference in

typical buyer behavior is precisely what justified the view

among dealers that a customer’s race would predict

bargaining behavior. Thus, even if there are no intrinsic

differences in bargaining ability between the two

populations, an equilibrium can emerge where the

dealers’ rule of thumb, “be tougher with blacks,” is all too

’ clearly justified by the facts.”

This model predicts a particularly insidious form of lingering

effect. Outright racial bigotry in an earlier generation of car

dealers, based on the stereotype of blacks as naive and foolish

consumers, would condition black consumer expectations and

bargaining behavior. A current generation of car dealers, who

considered themselves free from bigotry, would engage in a

9

“race-neutral” practice of hard bargaining and “learn” from

repeated interactions that they can safely demand higher prices

from black consumers, thus reinforcing the stereotype born in

bigotry and maintaining a racial inequity in the market for

automobiles.

The disparity between test scores among the students studied

by Steele and Aronson and between car prices offered to the

testers in Ayres’ study simply cannot be adequately explained

without reference to race. The disparity should not be attributed

to innate racial differences in test-taking ability or consumer

sophistication. Yet, this racial disparity can be explained

without assuming bigotry on the part of either the test givers or

car retailers.

Such social science findings as discussed above, that show

how racial discrimination practiced by past generations can

have powerful continuing effects in the present, make clear the

importance of including “lingering effects” along with “present

practice” in the definition of compelling interest set forth by

this Court in the 1995 Adarand decision. Loury poses the

following question in his DuBois lectures: “[S]Jhouldn’t

somebody learn what is going on and intervene to short-circuit

the feedback loop producing this inequality?” Obviously the

federal government is uniquely situated to attempt such

intervention. In the particular context of the DBE program,

DOT is in the position of what Loury terms a “monopolistic

observer”:

“ A competitive situation is one where there are a large

number of observing agents, each encountering subjects

from an even larger, common population, each taking

actions in relation to these subjects but knowing that, due

to their relatively insignificant size, no action they can

take will affect the population's characteristics. A

monopolistic situation is one where a single observing

agent (or a quite small number) acts on a population of

subjects. ... [I]f a small employer ... learned or was told

about such feedback effects, there would be nothing to be

10

done because, in a competitive situation, an individual’s

action has so little impact on the overall observing

environment." ... [On the other hand, a monopolistic

observer might] see the racially disparate outcome as

being anomalous or surprising ... [and] therefore find it to

be in his own self-interest to experiment, so as to learn

about the structure that is generating his observations.”

As a monopolistic purchaser of construction work on a huge

scale, the DOT is in a key position to acquire information about

lingering effects of racial discrimination and experiment with

ways to alter market and social mechanisms that perpetuate

those effects. As Loury points out, ‘if agents do not learn about

mechanisms within their control that reproduce inequality

through time, the results could be tragic ...” This account is

consistent with DOT’s own explanation for continuing the DBE

program after re-evaluating it in light of the 1995 Adarand

decision: “The most significant evidence demonstrating the

need of a goal-oriented program is the evidence cited of the fall-

off in DBE participation in state contracting when goal-oriented

programs end, compared to participation rates in the Federal

DBE program.” Participation by Disadvantaged Business

Enterprises in Department of Transportation Programs: Final

Rule, 64 Fed. Reg. 5096, 5102 (Feb. 2, 1999) (Supplementary

Information: Background). The DOT quoted extensively from

Congressional debates in 1998 over the Transportation Equity

Act for the 21st Century (TEA-21) which contained a provision

retaining the DBE program. In particular the DOT cited the

following statement by Senator Robb:

“Where DBE programs at the Siate level have been

eliminated, participation by qualified women and

‘© For example, in Loury’s model, a retail car dealer who was troubled

about a pattern of higher prices paid by black consumers for the same vehicles

could not alter black consumer behavior simply by changing his own

bargaining practices, by offering black consumers the same deal as white

consumers. Such an idealistic car dealer would simply end up making less

money than the other dealers in the community who continued to assume

correctly that black purchasers would accept higher prices.

11

qualified minorities has plummeted. There is no way to

know whether this discrimination is intentional or

subconscious, but the effect is the same. This experience

demonstrates the sad but inescapable truth that, when it

comes to providing economic opportunity to women and

minorities, passivity equals inequality.” Id. at 5101, citing

144 Cong. Rec. $1422. (1998).

Of course it is possible that the virtual disappearance of DBE

subcontractors in the absence of affirmative action incentives

for prime contractors might have been in part due to DBE

inability to submit the lowest bids or, as discussed above, bids

viewed as most likely to be performed per specifications and on

time. Prime contractors who accept the lowest bids, or prefer

bidders they know personally, are not obviously engaging in

“reward bias” discrimination, but the inability of DBE

contractors to win a competitive bidding process might

nonetheless be the product of the “lingering effect” of

“development bias.” The most significant point made by

Senator Robb is that government should not be a passive

participant in an unregulated market for highway construction

work even if the government is not yet able to trace all the

complex and subtle causes of the situation.'' As this Court said

in the 1995 Adarand decision that “government is not

disqualified from acting in response” to such a situation.

'' The DOT cites a statement by Senator Baucus that DBE

participation in the state-funded portion of the highway program in Michigan

fell to zero in a nine month period after the state terminated its DBE program,

while the federal DBE program in Michigan was able to maintain 1” ~~

percent participation, id. citing 144 Cong. Rec. S 1404, anda follow p

statement by Senator Kerry, “[I]}s that just the economy of our cow try

speaking, an economy at one moment that is capable of having |2 percent and

at another moment, when they lose the incentive to do so, to drop down to

zero [7] .... You could not have a more compelling interest if you tried” id.

citing 144 Cong. Rec. $1409-10. The Congressional debates described

similar drastic drops in DBE participation when affirmative action programs

in state or local government procurement ended in California, Florida,

Louisiana, Missouri, Nebraska, and Pennsylvania. Id.

12

In redesigning the DBE program -- proceeding in response

to the 1995 Adarand decision through the process of legislative

deliberation and administrative rule-making -- the federal

government seems to be trying to “experiment” in just the ways

a monopolistic agent should act, according to Loury, and is

recruiting state governments as partners in this endeavor. States

who engage in DOT-funded highway construction are required

to compile and analyze data to estimate the level of DBE

participation in such construction to be expected “absent the

effects of discrimination”” including a possible adjustment to

“account for the continuing effects of past discrimination.” 49

C.F.R. § 26.45(b) and (d)(3). Each state must then submit to

DOT an annual overall state-wide goal that reflects this

“discrimination-free” estimate of DBE participation. The state

must then endeavor to meet this state-wide goal through “race-

neutral” means and is only permitted to set contract-specific

goals for DBE participation if the race-neutral approach is not

expected to meet the overall state goal. The current DBE

program thus attempts to determine empirically in each state

whether there are lingering effects of discrimination affecting

the market in highway construction work and whether

affirmative action is needed to prevent perpetuation of those

effects. The critical question is whether the “racial

presumptions” central to the DBE program are narrowly

tailored to this endeavor.

B. THE USE OF RACIAL PRESUMPTIONS IN THE

DBE PROGRAM |

The Department of Transportation’s program for

Disadvantaged Business Enterprises was developed in response

to a Congressional mandate that “not less than 10%” of federal

highway funds be expended “with small business concerns

owned and controlled by socially and economically

'2 This estimate takes into account discrimination in the private market.

See lan Ayres & Frederick E. Vars, When Does Private Discrimination

Justify Public Affirmative Action?, 98 Columbia L. Rev. 1577 (1998).

|

13

disadvantaged individuals.”'? The DBE program is thus built

on the concept of “social and economic disadvantage” which

came from two pre-existing programs of the Small Business

Administration: (1) the Minority Small Business and Capital

Ownership Development (BD) program authorized by Section |

8(a) of the Small Business Act, and (2) the Small

Disadvantaged Business (SDB) program for federal contracts

authorized by Section 8(d) of the Small Business Act.

Originally this case challenged the constitutionality of the SDB

program because Adarand Constructors lost its bid to be a

subcontractor on a federal construction contract. It appears

from the Court’s definition of the questions presented on

certiorari that the case now also addresses the constitutionality

of the DBE program, even though the DBE program relates to

state highway construction contracts, funded by DOT, rather

than the kind of direct federal contract that give rise to this

litigation. Even though the constitutionality of the BD program

is not directly at issue in this case, the SDB and DBE programs

cannot be fully understood except by reference to the BD

program.

1. Racial Presumptions in The SBA Business Development

(BD) Program

Unlike the SDB and DBE programs, the BD program is not

limited to government-funded contracts; however, many (but

not all) of its definitions and procedures for determining “social

and economic disadvantage” are incorporated by reference into

the SDB and DBE programs. The statutory provision creating

the BD program -- unlike the provisions underlying the SDB

and DBE programs -- does not create a presumption of

disadvantage based on membership in a specified racial group.

Racial identity is mentioned in the BD statutory provision only

'? The most current source of this mandate is Section 1101(b) of the

Transportation Equity Act for the 21st Century, Public Law 105-178, signed

into law on June 9, 1998, to be found at 112 Statutes at Large 113-115

(1998).

14

as a possible direct cause of social disadvantage, and indirect

cause of economic disadvantage:

“Socially disadvantaged individuals are those who have

been subjected to racial or ethnic prejudice or cultural bias

because of their identity as a member of a group without

regard to their individual qualities. Economically

disadvantaged individuals are those _ socially

disadvantaged individuals whose ability to compete in the

free enterprise system has been impaired due to

diminished capital and credit opportunities as compared

to others in the same business area who are not socially

disadvantaged.” 15 U.S.C § 637 (a) (5), (6)(A)

The SBA regulations that implement the BD program do,

however, create a presumption of social disadvantage based on

membership in one of five designated groups: Black Americans,

Hispanic Americans, Native Americans, Asian Pacific

Americans, and Subcontinent Asian Americans. 13 C.F.R. §

124.103 (b). Membership in one of these groups does not give

rise to a presumption of economic disadvantage, which is

instead determined by reviewing an applicant’s “personal

narrative” describing his or her economic disadvantage,

supported by personal financial information. 13 C.F.R. §

124.104.

The SBA also has authority to designate additional groups

that are “socially disadvantaged.” 13 C.F.R. § 124.103(d)(2)

allows “representatives of an identifiable group whose

members believe that the group has suffered chronic racial or

ethnic prejudice or cultural bias” to petition the SBA to be

included as a “presumptively socially disadvantaged group.”"

4 Under the DOT regulations, if the SBA adds a new group to its

“rebuttable presumption” list, that group then is also added for purposes of

the DBE program.

15

2. Racial Presumptions in The SBA Small Disadvantaged

Business (SDB) Program

In contrast to the BD program, the statutory provision

authorizing the SDB program for federal contracts does contain

a presumption of disadvantage, which applies to both social and —

economic disadvantage. Section 8(d) of Small Business Act

requires that most federal contracts include a clause requiring

the contractor to give small business concerns owned by

socially and economically disadvantaged individuals “the

maximum practicable opportunity” to participate in

subcontracts. The required clause further directs the contractor

to “presume that socially and economically disadvantaged

individuals include Black Americans, Hispanic Americans,

Native Americans, Asian Pacific Americans, and other

minorities, or any other individual found to be disadvantaged by

the Administration pursuant to section 8(a) of the Small

Business Act.” 15 U.S.C § 637(d)(3)(C).

Although this statutory language remains in place, the

decision of the Court of Appeals which is the subject of this

certiorari petition concluded that current federal regulations

implementing the SDB federal contracting program have

eliminated “the race-based presumption of economic

disadvantage.” Adarand Constructors v Slater, 228 F.3d 1147,

1185 (2000). The Court of Appeals cited two different chapters

of the Code of Federal Regulations in support of this

conclusion: Chapters 48 and 13. Chapter 48 contains the

Federal Acquisition Regulation. The three sections of Chapter

48 cited by the Court of Appeals all simply refer to Chapter 13,

part 124, subpart B, which contains SBA regulations, indicating

that the procuring federal agencies are relying on the SBA for

the definition of “small disadvantaged business” and

certification of eligible SDBs pursuant to that definition. The

Court of Appeals then cited only one section from the SBA

regulations on the SDB program, which answers the question,

“What is a Small Disadvantaged Business (SDB)?”:

16

“(a) Reliance on 8(a) criteria. In determining whether a

firm qualifies as an SDB, the criteria of social and

economic disadvantage and other eligibility requirements

established in subpart A of this part apply, including the

requirements of ownership and control and disadvantaged

status, unless otherwise provided in this subpart.” 13

C.F.R. § 124.1002(a) (2001) (emphasis added).

Because “subpart A of this part” refers to the BD regulations

(the 8(a) program), the Court of Appeals apparently interpreted

this reference as eliminating “the discrepancy between

individualized determination of economic disadvantage

characterizing the 8(a) program and the non-individualized

presumption of economic disadvantage characterizing the 8(d)

[i.e. SDB] program.” 228 F.3d at 1185. However, the Court of

Appeals did not pay sufficient attention to the “unless otherwise

provided” qualification at the end of the subsection. In a later

section of the SDB regulation entitled “Disadvantaged

determination,” the SBA clearly states:

“Those individuals claiming disadvantaged status that are

members of the same designated groups that are presumed

to be socially disadvantaged for purposes of SBA’s 8(a)

BD program (see 124.103(b)) are presumed to be socially

and economically disadvantaged for purposes of SDB

certification.” 13 C.F.R. § 124.1008(e)(1) (2001)

(emphasis added).

Because SBA regulations for the BD program designate “Black

Americans, Hispanic Americans, Native Americans, [and]

Asian Pacific Americans” as groups presumed to be socially

disadvantaged, 13 C.F.R. § 124.103(b), members of such

groups are presumed to be also economically disadvantaged for

purposes of the SDB federal contract program, thus making the

SDB implementing regulations consistent with Section 8(d) of

the Small Business Act.

The misinterpretation of the SDB regulations by the Court of

Appeals is a critical error, because the Court of Appeals

ag Sa ~~

17

explicitly stated that SDB program would not be narrowly

tailored “insofar as it obviates an individualized inquiry into

economic disadvantage.” 228 F.3d at 1184. It thus appears that

the Court of Appeals would have ruled in favor of petitioner

Adarand Constructors had the court correctly interpreted the

SDB regulations.

3. Racial Presumptions in the DOT Disadvantaged

Business Enterprises (DBE) Program

The statutory provisions that have authorized the DBE

program do not appear in the compiled U.S. Code and are only

to be found attached to successive appropriation bills, the most

recent being Section 1101(b) of Pub. L. No. 105-178, 112 Stat.

113 (1998). This provision, like its predecessors, does not

explicitly contain a racial presumption but instead states that the

“term ‘socially and economically disadvantaged

individuals’ has the meaning such term has under section

8(d) of the Small Business Act (15 U.S.C § 637(d)) [i.e.

the SBA’s SDB federal contract program] and relevant

subcontracting regulations promulgated pursuant thereto”

The statute does direct the Secretary of Transportation to

“establish minimum uniform criteria for State governments to

use in certifying whether a concern qualifies for purposes of

this subsection.” 112 Stat. 114. The DBE regulations this

Court discussed at length in its 2000 Adarand decision,

Adarand Constructors v Slater, 120 S.Ct. 722, 725-26, were

promulgated pursuant to this directive. Although the DBE

regulations relate to state highway construction contracts (that

received DOT funds), the regulations are nonetheless relevant

to the specific facts of this case, even though it originally

involved a federal highway construction contract. As this Court

pointed out, “DOT does not itself conduct certifications [of

DBE status], but relies on certifications from two main sources:

the Small Business Administration ... and state highway

agencies, which certify them for purposes of federally assisted

18

highway projects.” 120 S.Ct. at 723. Adarand Constructors

lost out in its bid for a guardrail subcontract to a company that

had been certified under the DBE regulations by the state

department of transportation. Id. at 724.

The racial presumption of both social and economic

disadvantage appears independently in the DOT regulations

along with a list of presumptively disadvantaged groups that

parallels the list in the SBA’s regulations but also specifically

defines the terms “Black Americans” and “Hispanic

Americans.” 49 C.F.R. § 26.5 Thus even if the Court of

Appeals correctly interpreted the SBA’s regulations for the

SDB federal contracting program as eliminating the racial

presumption of economic disadvantage, this presumption still

survives in the DBE regulations and is thus relevant to this case

-- even if Adarand Constructors’ claims are construed narrowly

to apply only to direct federal highway contracts such as the

one giving rise to the litigation.

C. THE NEED FOR SOCIAL SCIENCE METHODS TO

ACHIEVE NARROW TAILORING

Although the phrase “narrow tailoring” appears both in

cases involving judicially created remedies and affirmative

action programs developed by the other branches of

government, the phrase seems to have somewhat different

meaning in these two different contexts. When reviewing a

trial judge’s injunction intended to desegregate public schools

or remedy employment discrimination, “narrow tailoring”

draws upon historic principles of equity law. Because a judge

sitting in equity has potentially vast discretionary powers, a

reviewing court will look closely at whether the injunctive

relief is “narrowly tailored” to the evidentiary record as to

injury. In this context, narrow tailoring operates as a constraint

only on judicial power.

When reviewing an affirmative action plan created by a

legislature or executive agency, “narrow tailoring” cannot mean

el

19

that the legislature or agency is treated either as plaintiff with

a burden of proof to carry or as a trial court whose power is

limited to remedying specific injuries proven by the parties

before it. Instead, when reviewing legislative and agency

action, narrow tailoring instead seems more focused on

“smoking out” true motives rather than assuring that all relevant

facts have been established and used to design the most limited

effective remedy:

“(T]he purpose of strict scrutiny is to ‘smoke out’

illegitimate uses of race by assuring that the legislative

body is pursuing a goal important enough to warrant use

of a highly suspect tool. The test also ensures that the

means chosen ‘fit’ this compelling goal so closely that

there is little or no possibility that the motive for the

classification was illegitimate racial prejudice or

stereotype.” Croson, 488 U.S. at 493 quoted in, Adarand

515 U.S. at 226.

The narrow tailoring test when applied to the other branches is

particularly intended to reveal whether “classifications are in

fact motivated by illegitimate notions of racial inferiority or

simple racial politics.” Id. Thus in the Croson case the

inclusion of “Aleuts” was problematic not so much because

Aleuts might receive an undeserved benefit but because this

“random inclusion ... suggests that perhaps the city’s purpose

was not in fact to remedy past discrimination.” 488 U.S. at 506.

In 1994 George R. LaNoue and John C. Sullivan began

their analysis of the SBA’s decisions about which groups

should be entitled to affirmative action with these words: “[I]n

affirmative-action terms, minorities have become almost

universally defined as blacks, Hispanics, Asians, and Pacific

Islanders, Native Americans, Eskimos, and Aleuts. But why?

The Supreme Court keeps challenging governments for an

answer, without a definitive response.” Presumptions for

Preferences: The Small Business Administration's Decisions on

Groups Entitled to Affirmative Action, 6 Journal of Policy

20

History 439-40 (1994). Their statement remains true today;

even the record in this case is remarkably silent on this

question. Adarand Constructors contends that the phrase

“socially and economically disadvantaged” is really just a proxy

for racial categories. After an exhaustive review of SBA

records obtained pursuant to the Freedom of Information Act,

LaNoue and Sullivan came to a similar conclusion:

“Examining this record, it is difficult to discern any

consistent application of the agency’s published

procedural or substantive standards. ...[T]he relative

economic disadvantage of groups is quantifiable and the

data were often available from census records. The SBA

never used the data and never analyzed them when

petitioners [seeking to be added to the list of

presumptively disadvantaged groups] introduced them,

but instead employed a hodgepodge of rationales that

appear to be largely pretexts for its decisions. ...On the

other hand, when the agency did expand eligibility ... it

did so without any independent examination of the actual

social or economic status of those groups in America.” Id.

at 461

According to LaNoue & Sullivan, the SBA’s list of

disadvantaged groups has its earliest origins in the list of

“minority groups” that appeared in Standard Form 40,

developed by President Kennedy’s Committee on Equal

Employment Opportunity, to be used solely for statistical

reporting purposes in employment prior to the Civil Rights Act

of 1964. Id. at 440-44. This list, and its successor

incorporated into Reporting Form EEO-1, necessarily was

based on racialized categories of appearance because employers

who filled out these forms were instructed to avoid asking

employees which group they belonged to, but were to rely on

only visual identification."®

'S John David Skrentny, The Minority Rights Revolution 29 (pre-

publication draft 2001). Polish leaders were told that Poles could not be

added to the reporting form because employers could not be expected to

21

“When affirmative-action concepts changed and the racial

and ethnic categories used for reporting were transformed

into requirements for proportional representation in the

workforce and other areas, there was still virtually no

debate about which groups should be included. The

concept of who was a minority was passed from program

to program with very little reconsideration.” LaNoue &

Sullivan at 441.

The government’s failure to re-assess its listing of “official

minorities” can create an appearance of “random inclusion” that

undermines the credibility of a program justified primarily in

terms of remedying the lingering effects of past discrimination.

The problem is that although members of all five groups

listed in the DBE program might share common vulnerability

to current practices of racialized “reward bias,” they differ

greatly in terms of how their group membership might indicate

“development bias.” For several of the designated groups a

very significant percentage are first or second generation

immigrants. Also social science data indicate that the extent of

contemporary social segregation differs considerably among the

groups.’® To the extent that eliminating “lingering effects” is

the compelling interest for the DBE program, the

undifferentiated aggregation of the five groups into a single

presumption of disadvantage does create a risk of

overinclusion. The development and implementation of state-

wide goals might be particularly distorted by this problem. It

appears that the regulations require that all existing DBEs, and

all persons who might be potential DBE owners absent the

lingering effects of discrimination, be counted as a single total

for setting the goal and measuring progress toward achieving

identify them visually. Id. at 439. (Based on correspondence between author

and Herbert Hammerman, EEOC’s Chief of Reports in the 1960s.)

= See John David Skrentny, Affirmative Action and New

Demographic Realities, The Chronicle of Higher Education B7 (February 16,

2001); Urban Inequality: Evidence from Four Cities (Alice O'Connor, Chris

Tilly & Lawrence Bobo, eds.,2000).

22

the goal. See 49 C.F.R. § 26.45(h). If the analysis set forth

above is correct, persons from groups least affected by

intergenerational effects of past discrimination and current

patterns of social segregation may be more likely to be

successful competitors in the market for highway construction.

Automatically presuming such persons as disadvantaged might

not only expand the scope of the DBE program beyond that

justified by the “lingering effects” rationale, but also creates the

risk of not really addressing the “lingering effects” problem. It

is possible that participation of DBEs from less disadvantaged

groups might therefore comprise a high proportion of all DBE

contracting in a state, disguising a continuing failure to assist

persons whose group membership is actually more indicative of

“lingering effects,”thus depriving the government of the kind of

feedback information needed to learn how to break the tragic

cycle that reproduces inequality over time.

Excessive reliance on racialized categories could also result

in seriously disadvantaged groups being erroneously excluded.

For example, it is frequently asserted that “Asian Americans”

do not need affirmative action because socioeconomic

indicators show that “they” are better off than the average

American. The following table seems to support such

assertions.

1980 Census Data"’

% college % Relative Poverty

grads unemployed | family income | rate

All 16.2 6.5 1.0 9.6

Americans

Asian- 34.3 4.6 1.19 10.3

Americans

'7 George R. LaNoue & John C. Sullivan, Group Presumptions:

Determining Group Eligibility for Federal Procurement Preferences, 41

Santa Clara L. Rev. 103, 131 (2000), citing Civil Rights Issues Facing Asian

Americans in the 1990s 12-13 (U.S. Civil Rights Commission 1992).

23

However, when the racialized category of “Asian Americans”

is broken down into national origin groups, one can see by

comparing “All Americans” with lines 3-5 the error of such a

“better off” generalization.

% college % Relative Poverty -

grads unemployed | family income | rate

All 16.2 6.5 1.0 9.6

Americans

Asian- 34.3 4.6 1.19 10.3

Americans

Vietnamese | 12.9 13.4 0.65 33.5

Laotian 5.9 15.3 0.26 67.2

Cambodian | 7.7 10.6 0.45 46.9

Hmong 2.9 20.0 0.26 65.5

When an even more precise category --- ethnicity -- is used to

separate the Hmong in line 6 from other Laotians, one can see

even more severe indications of disadvantage (e.g. 2.9% college

graduates, 20% unemployment -- the worst of any the groups

listed)

The goal of narrow tailoring might be well served if the SBA

commissioned an independent group of experts to advise it on

reevaluating group designation. John Skrentny has recently

called for the creation of a commission “to measure equal

opportunity, throwing out all of the old assumptions and asking

fresh questions.” The report produced by such a commission

“should not infer patterns of discrimination solely from

statistics of employment representation or compensation, but

should also include the ‘tester’ studies favored by some civil-

rights groups, whereby persons of varying races and ethnicities

apply for jobs, housing, or loans at the same places, and the

results are compared. Further, a truly comprehensive report

would use interviews, and cull the results of past and new

ethnographic studies of the role that discrimination may play in

24

American life.” Affirmative Action and New Demographic

Realities, The Chronicle of Higher Education B7, B10

(February 16, 2001)

Unfortunately there are some dicta scattered through

affirmative action case law that may discourage agencies like

the SBA from undertaking such an empirical inquiry. For

example, this Court in Croson expressed concern that

affirmative action programs based on past “societal

discrimination” would become “lost in a mosaic of shifting

preferences based on inherently unmeasurable claims of past

wrongs.” 488 U.S. at 505-6. The Court went on to quote in part

from the following famous statement by Justice Powell in his

Bakke opinion:

“There is no principled basis for deciding which groups

would merit ‘heightened judicial solicitude’ and which

would not. Courts would be asked to evaluate the extent

of the prejudice and consequent harm suffered by various

minority groups. Those whose societal injury is thought

to exceed some arbitrary level of tolerability then would

be entitled to preferential classifications at the expense of

individuals belonging to other groups. ... As these

preferences began to have their desired effect, and the

consequences of past discrimination were undone, new

judicial rankings would be necessary. The kind of

variable sociological and political analysis necessary to

produce such rankings simply does not lie within the

judicial competence ...” 438 U.S. at 295-97

It is important to note, though, that Justice Powell was speaking

about “judicial competence.” It is one thing for the judicial

branch to say that it cannot “measure” the effects of past

discrimination and quite another to assert that neither of the

other branches are capable of doing so.

There is one major country in the world that has a longer

history -- a much longer history -- than the U.S. of designing

and evaluating affirmative action programs: India. India’s

25

experience shows without a doubt that it is possible to design

a program to remedy the effects of past discrimination in which

beneficiary groups are designated through an objective process

based on empirical research. A comparative study of India also

illustrates the crucial role played by the courts in causing such

a process to develop and keeping it free of “illegitimate notions

of inferiority” and political pandering to ethnic voting blocks.

The suggestions at the end of this brief for modifying the DBE

program to maximize “narrow tailoring” are inspired in large

part by studying India’s approach to affirmative action.

D. THE USE OF.SOCIAL SCIENCE METHODS IN

INDIA TO TAILOR GROUP PREFERENCES TO

LINGERING EFFECTS

Since the adoption of its Constitution in 1950, India has

afforded an extensive program of affirmative action to a set of

caste groups known as Scheduled Castes (the former

“untouchables”) and a set of tribal groups known as Scheduled

Tribes, which together constitute about 22 percent of the total

population. In addition, it has provided more selective

affirmative action measures to a number of groups within

Indian society, defined by the Constitution as “socially and

educationally backward classes,” who have suffered from a

history of economic exploitation and social segregation

comparable in some measure to that suffered by the

untouchables.'* The concept of “social and educational

backwardness” can be seen as an Indian version of Loury’s

“developmental bias” and thus suggests a point of comparison

‘* For a brief overview of India’s approach to affirmative action, see

Clark D. Cunningham, Affirmative Action: India’s Example, 4 Civil Rights

Journal 22 (1999) and Clark D. Cunningham & N.R. Madhava Menon, Race,

Class, Caste ...? Rethinking Affirmative Action, 97 Michigan Law Review

1296 (1999) (both on Equality Web Site). The classic account is Marc

Galanter, Competing Equalities: Law and the Backward Classes in India

(1984). .

26

with the idea of “social and economic disadvantage” in the

DBE program.

From 1951 through 1990, individual Indian states were left

on their own to develop criteria for providing preferential

treatment in higher education and government employment to

what came to be known as OBC’s (“other backward classes”).

A recurrent problem developed: the extension of affirmative

action to caste groups apparently based on more on their

political clout in a particular state than their actual need for

preferential treatment relative to other groups, leading to

repeated Supreme Court decisions ordering states to redesign

their programs using more objective and transparent

processes.'* Dissatisfaction with the state-level approaches led

to appointment of a Presidential Commission in 1980 (known

as the “Mandal Commission” after the name of its

Chairperson), which issued a comprehensive report and set of

recommendations for national standards. The Mandal

Commission conducted a national survey that started with

generally recognized group categories (typically based on caste

name or hereditary occupation) and tested each group using

standardized criteria of “backwardness” (such as comparing the

percentage of group members who married before the age of 17

or did not complete high school with other groups in the same

state).

Implementation of the Mandal Report was announced by the

Prime Minister in 1990 but delayed until the Supreme Court

reviewed various constitutional challenges to its methodology

and recommendations. In 1992 the Supreme Court approved

most of the recommendations of the Mandal Report in /ndra

Sawhney v Union of India (1), 1993 All India Reports (S.Ct.)

477. Two aspects of the Sawhney decision provide particularly

'§ For a concise overview of this history see Clark D. Cunningham &

N.R. Madhava Menon, Seeking Equality in Multicultural Societies (n.d. on

Equality Web Site). For greater detail see Sunita Parikh, The Politics of

Preference: Democratic Institutions and Affirmative Action in the United

States and India (1997).

27

interesting points of comparison with the case now before this

Court. First, the Court approved the basic assumption of the

Mandal Report that neither traditional caste categorization nor

economic status, standing alone, was a sufficient basis for

classifying a group as an OBC. Traditional caste categories can

be used as a starting point for identifying OBCs but selection

criteria must include empirical factors beyond conventional

assumptions that certain castes are “backward.” Second, the

Court added a new criteria for affirmative action eligibility.

The Court ruled that OBC membership only creates a rebuttable

presumption that a person needs preferential treatment;

therefore, the state must also use an individualized economic

means test to eliminate persons from affluent or professional

families (termed “the creamy layer test”). This creamy layer

test looks to the occupation and income of a person’s parents,

an approach consistent with Loury’s economic theory that

distinguishes between “human capital” and “social capital.”

The creamy layer test apparently assumes that if one’s parent

has achieved substantial occupational and financial success

(perhaps despite suffering personal discrimination) the parent

will pass on that social capital to the child, thus minimizing the

“lingering effects” of discrimination. The creamy layer test

thus responds to two different criticisms of affirmative action

commonly voiced in the United States: (1) that many

affirmative action beneficiaries come from privileged

backgrounds and don’t really need affirmative action and (2)

that affirmative action benefits do not reach the “truly needy”

because they are monopolized by more privileged members of

the group. Each state in India was directed to add a “creamy

layer” test to its programs to benefit OBCs.

In 1996 the Supreme Court of India struck down a definition

of the “creamy layer” by two state governments that arbitrarily

set the threshold for parental wealth and status so high as to

make the test ineffective. Ashoka Kumar Thakur v. State of

Bihar, 1996 All India Reports (S.Ct.) 75. In Indra Sawhney

(II), 2000 All India Reports (S.Ct.} 489, the Supreme Court of

28

India had to contend with another state government that

“declared” by state legislation there was no “creamy layer”

among any of the backward classes in that state. The Supreme

Court appointed its own commission to establish an interim

creamy layer set of criteria for that state and then implemented

the commission’s recommendations. The Court pointedly

observed that the state’s refusal to implement a creamy layer

test “appears to have been taken because the real backward

[classes] have no voice in that decision-making process.” Id. at

521.

Both the American DBE and the Indian OBC programs begin

with a general, abstract category of “disadvantage” or

“backwardness” and claim to be providing preferential

treatment to specific ethnic groups only because they happen to

fit into the category. Both programs insist that disadvantage

can not be explained solely in economic terms; for both social

disadvantage provides the rationale for using ethnicity to

identify and delimit beneficiary groups. The requirement of an

individualized determination of economic disadvantage under

the SBA’s BD program resembles India’s “creamy layer test,”

although the Supreme Court of India requires that specific,

objective economic criteria be set out, such a specific cut-off for

parental income or extent of agricultural land owned. It is

important to note that the Supreme Court of India does not itself

decide whether any particular group is appropriately classified

as eligible for affirmative action; rather, strict scrutiny in India

focuses on the procedures and criteria used. Perhaps the key to

the Indian approach is that criteria and procedures for deciding

whether a group is sufficiently disadvantaged are announced in

advance, and then applied on the basis of empirical research.

This approach helps assure that classification is not “the

product of rough compromise struck by contending groups

within the democratic process,” Bakke, 438 U.S. at 299

(opinion of Powell, J) or as this Court said in the 1995 Adarand

decision, “simple racial politics,” 515 U.S. at 226 (quoting

Croson, 488 U.S. at 493 (plurality opinion of O’Connor, J.)).

29

CONCLUSION

Only one statutory provision prevents the SBA and DOT

from engaging in more effective tailoring of the concept of

“social and economic disadvantage” to the problem of

remedying the lingering effects of past discrimination. That

provision is the phrase requiring federal contractors to

“presume that socially and economically disadvantaged

individuals include Black Americans, Hispanic Americans,

Native Americans, Asian Pacific Americans” in Section 8(d) of

the Small Business Act. If Congress simply removed the words

“and economically,” then the DOT would be free to amend its

regulations to conform to the SBA’s BD program that requires

an individualized determination of economic disadvantage.

This change alone (which the Court of Appeals believed has

already taken place) would go a long way toward tailoring the

DBE program more closely to the lingering effects problem.

However, India’s experience with implementing its comparable

“creamy layer” test suggests that the DOT and SBA would be

well advised to promulgate objective criteria of economic

disadvantage susceptible to judicial review to avoid the

appearance or reality of an illusory economic means test that

leaves racialized categories essentially unchanged.

If Congress removed the entire mandatory presumption

phrase from Section 8(d), then the SBA would be free to re-

assess the list of disadvantaged groups using the kind of social

science methods urged by John Skrentny and demonstrated by

India’s approach to affirmative action. Again, India’s

experience suggests that the SBA would be well-advised (and

perhaps should be required) to “start fresh” and also to re-

examine the list on a periodic basis, perhaps triggered by the

ten-year census.

. The following allegory about affirmative action, circulating

in academic circles, has its origins in remarks made by Glenn

Loury at a 1997 conference. Imagine a mad bomber with a

stockpile of biological and radiation weapons. The bomber

30

takes a state map where every county is marked. He colors

some counties red, some green, some blue. Taking that map

aloft, he drops biological weapons on the red counties, radiation

weapons on the green counties, and all that he has left of both

kinds on the blue counties. He then kills himself in a suicide

crash. Although many residents of the targeted counties

become ill almost immediately, the terrible extent of the harm

he caused becomes suspected only as the years go by and public

health officials begin to notice patterns of cancer and birth

defects. The situation is complicated not only by the varying

pattern of bombing, but also by the passage of time as people

move out of the targeted counties, carrying illness with them,

and others move into the counties where the still potent effects

of the bombing linger. Perhaps with massive data collection

and sophisticated analysis, the government might eventually be

able to reconstruct the pattern of bombing and precise weapons

used on each county. But what if the bomber’s map has been

discovered in the rubble of his crashed plane? Of course the

government should refer to the map in order to restore public

health. And that is the goal of a well-designed affirmative

action plan: to use a map that projects the complex patterns of

past and continuing discrimination onto the current geography

of our nation to guide the uncertain but essential task of

restoring social and economic health for the victims of that

discrimination.

In the allegory it is obvious that the long-lasting public

health crisis will not go away by pretending that the map does

not exist or by prohibiting officials from using it. If there was

a judicial role in the story, it would be to make sure that

government has, in fact, the right map, and is indeed using it in

order to remedy the harm the bomber caused.

Respectfully submitted,

Clark D. Cunningham

Counsel of Record for Amicus Curiae

June 1, 2001